The Last Word: Main Street Agents in it to Win

It was with a sense of disbelief that I read the guest column in the October issue of American Agent & Broker, “Get on Board or Get out of the Way” by CIAB president Ken Crerar, in which he suggests that small and midsize insurance agencies consider going out of business.

Such a suggestion, aside from being insulting, is built upon questionable assumptions, specifically MarshBerry predictions that in 7 years there will be only 3,500 agencies in the country with premium volumes of $500,000 or less and an explosion in the number of very large firms.

For such prognostications to have credibility, they would need to come from a more objective source than a firm specializing in advising, brokering and executing agency mergers and acquisitions. Fostering an impression that the only hope of success for owners of small or midsize agencies is to grow larger through acquiring is misleading because it ignores what independent agents have done for decades and continue to do: compete and win.
The central premise is that bigger is better. I don't buy it. Every day, individuals and small business owners increasingly are frustrated by the lack of service and cookie-cutter advice from large companies and financial institutions. Large multinational entities in banking and securities hardly have cornered the marketplace on competence, innovation or integrity. Simply being large is not the competitive advantage that it once was touted to be. If you don't believe that, you could ask the investment banks–those still in business.
Crerar's guest column also suggests that opposition to optional federal charters or to a wider role for the federal government in the business of insurance is either resistance to positive change or protectionism. It is neither.
Main Street insurance agents believe in a robust, competitive insurance marketplace that is free and open, with many insurers and producers of all sizes–not a market artificially constricted by federal intervention that provides fewer choices and higher costs for consumers. We do not believe there are too many insurance companies or too many insurance producers. To the contrary, we believe the more competition there is, the better it is for carriers, producers and consumers.
The kind of federal interference in insurance that Crerar recommends and the sort of market constriction he applauds represent protectionism for mega-firms. We believe the only “protectionism” that should be at issue is consumer protection.
Placing regulatory oversight in the hands of an inexperienced federal bureaucracy struggling to come to grips with its oversight failures regarding so many other financial industry segments isn't going to enhance fair competition. It just tilts the field toward big brokers and away from the 99 percent of agents that actually serve Main Street America.
Crerar says, “If you can't get on board, get out of the way … because one way or the other, voluntarily or involuntarily, I'm betting you won't be around much longer.” I will be happy to take that bet because betting against Main Street independent insurance agents is, and has always been, a losing proposition.
Despite the wishful thinking of our direct writer and captive agent competitors, Main Street agents will not go away. We believe fervently in the American free enterprise system. Providing consumers with more choices is the key to winning for our entire industry. Those who ignore this basic free market principle will be the ones who won't be around much longer.
Our resilience must be frustrating to our competitors who, having failed to beat us in the marketplace, now attempt to get us to support legislation that would disadvantage us, or convince us that our future is so bleak that we should simply give up and throw in the towel.
Nice try. But forgive us if we continue to decline such magnanimous offers.